RMB Holdings Limited (RMH) is embroiled in a dispute with its subsidiary, RMH Asset Holding Company Proprietary Limited (RMHAH), regarding the interpretation of a loan facility agreement. The disagreement arises from a guarantee provided by RMH and RMHAH to Rand Merchant Bank (RMB), as security for a loan issued to Atterbury Property Holdings Property Limited (APH) in 2016.
In an announcement made on 30 June 2023, following the release of provisional results for the year ended 31 March 2023, RMH revealed that the parties have agreed in principle to enter into arbitration to resolve the dispute. However, subsequent negotiations on the terms of arbitration have not been successful.
According to the loan facility agreement, if APH determines that it lacks “sufficient cash resources” to repay the loan by 8 July 2023, it has the option to issue a conversion notice to RMB. This notice would allow APH to settle the outstanding amount by issuing ordinary shares, referred to as “conversion shares,” at the embedded value defined in the facility agreement, effectively converting the loan to equity.
|Company||Loan Facility Agreement||Dispute|
|RMB Holdings Limited (RMH)||Guarantee provided to RMB||Interpretation of “sufficient cash resources”|
|RMH Asset Holding Co. (RMHAH)||Guarantee provided to RMB||Terms of arbitration|
|Atterbury Property Holdings||Loan recipient from RMB||Repayment conditions|
|Rand Merchant Bank (RMB)||Loan provider and recipient of guarantee||Conversion of loan to equity|
RMH has expressed its expectation that APH will issue a conversion notice to settle the loan facility with RMB. However, in response, RMH has stated its intention to exercise its rights and decline the conversion notice as a means of settling the loan.
Throughout the past six months, RMH has explored various alternative solutions to resolve the dispute. The company assures its shareholders that it will provide updates on the progress of the arbitration as the situation unfolds.